Legal Regulations On Management Buy-out Of State-owned Enterprises

Management Buy-outs(MBO)is one of the A&M measures, which is adopted by managers who loan money to buy corporation stock shares so as to change the ownership structure of his corporation. MBO is a prolific and practical topic in overseas. Chinese state-owned enterprises (SOE) naturally have been met with many serious problems in the process of MBO. It is necessary to perfect the laws and regulations about MBO and make it legislatorial.Partâ… is about the qualitative analysis of the Management Buy-out. MBO is one of the A&M measures that manager who loans money to buy stock shares of his own corporation so as to change the ownership structure of the corporation and gain anticipated interests. MBO has the following characteristics: 1. The main investors are managers of the objective corporation. 2. The resource of money is from managers themselves or via financing. 3. Managers realize the purpose of reducing agent cost and gaining huge cash by purchasing the controlling power of the objective corporation and changing the company's structure. In western economics, there are developed theories about MBO and many economists demonstrate the theoretical foundations of MBO in different angles: 1. Agent cost. The goal of MBO is to resolve agent problem. After MBO, the managers are also the owners of the corporation leading to both the unification of ownership and management powers and the unification of outstanding achievement and reward, which encourage managers at utmost. 2. Encouraging mechanism. Modern entrepreneur devotes his human capital into the process of production...